For a layman Entrepreneur is a person who does an economic activity by selling a commodity which he or she owns, produces, grows etc or any service, based on his skill, which is needed by the society. Mankind has needs such as food, shelter, clothing, transport etc to live and perform various functions. It is also clear that each one of us is not sufficiently owns all of the things we need therefore we exchange the things or skills we have with the things or skills others have. It is needless to emphasize that money is the medium of exchange. This makes entrepreneurship (assuming it as synonymous to a trader or a manufacturer) a natural phenomenon which cannot be avoided in a society. Just like we need water, food and air at individual levels, therefore a healthy society needs a market where entrepreneurs operate to make available things which they have for the ones who need them, in exchange of a consideration. Just like it doesn't make any sense to emphasis the importance of clean air, water and healthy food at individual level, similarly what sense does it make to emphasis on the importance of entrepreneurship at social level?
The title of the article refers to Economic Growth, which can be measured in individuals (per capita) or over all earning (GDP) of the society. The question stated above can be answered in two ways, (a) it doesn't make any sense (b) it makes sense which is as follows ... Which of the two answers would it be depends upon the significance the beholder attaches to the term Economic Growth.
Why Economic growth is important, and how entrepreneurial function should operate in order to contribute to economic growth? If Economic growth would have been a function of population growth then again the title wouldn't have made any sense as increasing population will increase demand and thus more supply will be needed which of course will increase entrepreneurial activity. In short increase in population will naturally increase entrepreneurial activity which will add to the economic growth, if there are no exogenous factors restricting entrepreneurial activity like floods or famines etc. If you grow old, you consume more calories, that is natural, why highlight or emphasize it, unless some special form of food is discovered which helps in physical growth of a man at a much faster rate with a small quantity.
Economic growth, in its contemporary sense is not a function of population growth by any significant means. Economic growth is observed moving fast beyond the population growth in almost all developing or developed countries (sic); which means many men and women in these countries are consuming and spending more then they actually need.
Entrepreneurs in such societies would also be operating at a much higher level of excitement because more is required then what is needed and in order to fulfill the demand of things which are not needed, but desired. Is this a natural phenomenon? Why people consume things that they don't need? And why they strive to earn enough to buy things they don't need, but desire, really? What’s putting them into such a behavior or habit? What kind of value system they have which justify something unnatural? Or is it justified to call it greed or lust, keeping in view that they are also natural human instincts?
Perhaps in the modern world there is no way a society increase it’s earning with a percentage greater then its population growth rate unless the people are greedy enough to strive for things which they don't need. Accumulation of wealth and resources is considered justified. They strive to earn more to purchase more, to consume more, to show off more, to accumulate more. The entrepreneurs can add to the economic growth only in such a greed justifying value system persists in a society. In absence of such a value system where greed and unprecedented accumulation is considered bad, people share and serve others, they tend to be kind and conscious of needs of people living around them. This is observed in societies today or in the past which are/were religious in nature, where joint family systems are/were intact and sharing of resources is/was considered a normal and preferred practice.
In such a value system entrepreneurs can only sell what is needed in a society. Like a big refrigerator for the entire family, like a big car for the entire family etc. if caring culture is more prevalent then the phenomenon of creative destruction, i.e. creating new technologically advance products to destroy the older ones will not be preferred, unless ‘needed’. If analogue phones are fulfilling the need they why you need a digital phone? If CRT based monitors or TVs are doing the job then why you need LCDs? Cars would be running on clean compressed air instead of gasoline.
An entrepreneur in such a society will consider it immoral to market a new product or service while stealing the market of other products or services as this would hurt older entrepreneurs or the people working with him inside and outside the organization. This would happen because people care for each other and in case any new invention which is beneficial for the people is introduced, it will be done in a way that it doesn't actually hurt, steals the business of others. In such a society social cohesion will supersede the economic growth as this is what the value system of such societies find justified. Any excess production will either be saved for bad times or will be gifted to poor pockets, if there be any, or to neighboring countries etc. The entrepreneurs will comply with such a value system, in societies which are primarily religious.
Contrary to this entrepreneurship will impact on economic growth, only in societies which runs through a value system which justify the pursuit of self-interest single-mindedly, which believes in objectivism (Ayn Rand) or something closer to the ideals of egoistic hedonism. These are different pretexts which can justify greed and pleasure maximization, and if such a value system persists in any given society only there we can see an increase in the earnings greater then the population growth. Only if we see through the lens of such a value system, then the discussion on the impact of entrepreneurship on economic growth will be considered justifiable. If the contrary would be true then it will be instead make sense to discuss the impact of entrepreneurship on social cohesion, strengthening of family system, social ties, social harmony and unity in a given society. Economic growth, beyond the growth of population, wouldn't make any sense then.
Today the post industrialist societies are caught in such a malaise to an extent that they see this transformation or evolution, driven by enlightenment movements during and after the period of renaissance, as an ending point in history (Fukuyama, 1992), as if this is where mankind were destined to be. The value system which justifies greed, accumulation and subsequent presumptuous pleasure maximization is now deeply embedded in the social fabric and institutional framework of the post industrial societies. Every action has an equal and opposite reaction, the Newton’s law perhaps even hold true for civilizations as well, as during the Christendom or dark ages greed and accumulation were considered as loath-able. Since renaissance was a reaction to the other unjust aspects of dark ages (mentioning of those is out of scope of this article) therefore while making an inverse of the society good things were also inversed. The traits of greed, pleasure maximization and accumulation became motivators toward material prosperity of individuals who bowed to the liberal, secular and capitalistic god.
Since there is/was no upper limit to accumulation and growth therefore monetary scarcity of physical cash (gold and silver in the past, now paper), is/was a constraint in the process of accumulation. The only way to overcome this limitation was to borrow from the future. The entire financial system evolved for the sake of it, which allowed the accumulators and pleasure maximizers to borrow money in a form which didn’t existed in the present. This formless money (known as M1, M2 … Mn in Economics) when was spent via cheques, demand drafts, pay orders, bills etc converted the debt of one person into deposits of another. From the entrepreneurs to the individual consumer, everyone borrowed. This forced everyone to produce and consume more to earn enough to payback the principle with interest so as to avoid their accumulations to be taken away in case they defaulted. But the debt free money never existed, therefore the society kept on borrowing to payback their existing debts with interest. This exponentially increased the amount of debt accrued on the society and now the situation has almost reached to a boiling point in many of the developed countries.
The title of the article refers to Economic Growth, which can be measured in individuals (per capita) or over all earning (GDP) of the society. The question stated above can be answered in two ways, (a) it doesn't make any sense (b) it makes sense which is as follows ... Which of the two answers would it be depends upon the significance the beholder attaches to the term Economic Growth.
Why Economic growth is important, and how entrepreneurial function should operate in order to contribute to economic growth? If Economic growth would have been a function of population growth then again the title wouldn't have made any sense as increasing population will increase demand and thus more supply will be needed which of course will increase entrepreneurial activity. In short increase in population will naturally increase entrepreneurial activity which will add to the economic growth, if there are no exogenous factors restricting entrepreneurial activity like floods or famines etc. If you grow old, you consume more calories, that is natural, why highlight or emphasize it, unless some special form of food is discovered which helps in physical growth of a man at a much faster rate with a small quantity.
Economic growth, in its contemporary sense is not a function of population growth by any significant means. Economic growth is observed moving fast beyond the population growth in almost all developing or developed countries (sic); which means many men and women in these countries are consuming and spending more then they actually need.
Entrepreneurs in such societies would also be operating at a much higher level of excitement because more is required then what is needed and in order to fulfill the demand of things which are not needed, but desired. Is this a natural phenomenon? Why people consume things that they don't need? And why they strive to earn enough to buy things they don't need, but desire, really? What’s putting them into such a behavior or habit? What kind of value system they have which justify something unnatural? Or is it justified to call it greed or lust, keeping in view that they are also natural human instincts?
Perhaps in the modern world there is no way a society increase it’s earning with a percentage greater then its population growth rate unless the people are greedy enough to strive for things which they don't need. Accumulation of wealth and resources is considered justified. They strive to earn more to purchase more, to consume more, to show off more, to accumulate more. The entrepreneurs can add to the economic growth only in such a greed justifying value system persists in a society. In absence of such a value system where greed and unprecedented accumulation is considered bad, people share and serve others, they tend to be kind and conscious of needs of people living around them. This is observed in societies today or in the past which are/were religious in nature, where joint family systems are/were intact and sharing of resources is/was considered a normal and preferred practice.
In such a value system entrepreneurs can only sell what is needed in a society. Like a big refrigerator for the entire family, like a big car for the entire family etc. if caring culture is more prevalent then the phenomenon of creative destruction, i.e. creating new technologically advance products to destroy the older ones will not be preferred, unless ‘needed’. If analogue phones are fulfilling the need they why you need a digital phone? If CRT based monitors or TVs are doing the job then why you need LCDs? Cars would be running on clean compressed air instead of gasoline.
An entrepreneur in such a society will consider it immoral to market a new product or service while stealing the market of other products or services as this would hurt older entrepreneurs or the people working with him inside and outside the organization. This would happen because people care for each other and in case any new invention which is beneficial for the people is introduced, it will be done in a way that it doesn't actually hurt, steals the business of others. In such a society social cohesion will supersede the economic growth as this is what the value system of such societies find justified. Any excess production will either be saved for bad times or will be gifted to poor pockets, if there be any, or to neighboring countries etc. The entrepreneurs will comply with such a value system, in societies which are primarily religious.
Contrary to this entrepreneurship will impact on economic growth, only in societies which runs through a value system which justify the pursuit of self-interest single-mindedly, which believes in objectivism (Ayn Rand) or something closer to the ideals of egoistic hedonism. These are different pretexts which can justify greed and pleasure maximization, and if such a value system persists in any given society only there we can see an increase in the earnings greater then the population growth. Only if we see through the lens of such a value system, then the discussion on the impact of entrepreneurship on economic growth will be considered justifiable. If the contrary would be true then it will be instead make sense to discuss the impact of entrepreneurship on social cohesion, strengthening of family system, social ties, social harmony and unity in a given society. Economic growth, beyond the growth of population, wouldn't make any sense then.
Today the post industrialist societies are caught in such a malaise to an extent that they see this transformation or evolution, driven by enlightenment movements during and after the period of renaissance, as an ending point in history (Fukuyama, 1992), as if this is where mankind were destined to be. The value system which justifies greed, accumulation and subsequent presumptuous pleasure maximization is now deeply embedded in the social fabric and institutional framework of the post industrial societies. Every action has an equal and opposite reaction, the Newton’s law perhaps even hold true for civilizations as well, as during the Christendom or dark ages greed and accumulation were considered as loath-able. Since renaissance was a reaction to the other unjust aspects of dark ages (mentioning of those is out of scope of this article) therefore while making an inverse of the society good things were also inversed. The traits of greed, pleasure maximization and accumulation became motivators toward material prosperity of individuals who bowed to the liberal, secular and capitalistic god.
Since there is/was no upper limit to accumulation and growth therefore monetary scarcity of physical cash (gold and silver in the past, now paper), is/was a constraint in the process of accumulation. The only way to overcome this limitation was to borrow from the future. The entire financial system evolved for the sake of it, which allowed the accumulators and pleasure maximizers to borrow money in a form which didn’t existed in the present. This formless money (known as M1, M2 … Mn in Economics) when was spent via cheques, demand drafts, pay orders, bills etc converted the debt of one person into deposits of another. From the entrepreneurs to the individual consumer, everyone borrowed. This forced everyone to produce and consume more to earn enough to payback the principle with interest so as to avoid their accumulations to be taken away in case they defaulted. But the debt free money never existed, therefore the society kept on borrowing to payback their existing debts with interest. This exponentially increased the amount of debt accrued on the society and now the situation has almost reached to a boiling point in many of the developed countries.
The financial system has now turned the motivation to accumulate from greed to fear of bankruptcy now. Those who borrow money are worried of paying it back, but to do so they need to earn more to pay the interests along with the principles, therefore accumulation is not an option any more for them, it has turned necessary for their survival in the system. Those who don’t or cannot borrow also have to accumulate as increasing debt in the society and subsequent increase in the money supply is eroding away the value of their monetary savings.
A society, where growth in income, consumption and accumulation is not a choice but a deterrent from a self inflicted economic curse, any economic entity which aids in such a process will be highly appraised. In such an environment entrepreneurs will be highly regarded only if they facilitate in this process. They will be considered as saviors of human beings and society, as it is because of them that real accumulation, fear minimization (aka pleasure maximization) and blind pursuit of self-interest is possible.
When we take a bird’s eye view, the system in which entrepreneurs leading to economic growth is appraised, isn’t going to survive for long. Where fear is the stimulus ‘fight’ or ‘flight’ is the response. In America has 25% of worlds incarcerated population alone (fight) and suicide being the top 3rd cause of death among the population of 15-24 (flight). The system is bound to collapse, and one doesn’t need to be rocket scientist to predict that. Limited resources can satisfy limited needs, but cannot satisfy unlimited wants. When each one from group wants to maximum his share from a single pizza, they will eventually fight over, unless they learn to share.
There is more to human survival then just accumulating beyond our needs.
Author is an academic researcher, author, blogger, social entrepreneur, activist, mentor and tweets @javaidomar
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| From: Wikipedia |
A society, where growth in income, consumption and accumulation is not a choice but a deterrent from a self inflicted economic curse, any economic entity which aids in such a process will be highly appraised. In such an environment entrepreneurs will be highly regarded only if they facilitate in this process. They will be considered as saviors of human beings and society, as it is because of them that real accumulation, fear minimization (aka pleasure maximization) and blind pursuit of self-interest is possible.
When we take a bird’s eye view, the system in which entrepreneurs leading to economic growth is appraised, isn’t going to survive for long. Where fear is the stimulus ‘fight’ or ‘flight’ is the response. In America has 25% of worlds incarcerated population alone (fight) and suicide being the top 3rd cause of death among the population of 15-24 (flight). The system is bound to collapse, and one doesn’t need to be rocket scientist to predict that. Limited resources can satisfy limited needs, but cannot satisfy unlimited wants. When each one from group wants to maximum his share from a single pizza, they will eventually fight over, unless they learn to share.
There is more to human survival then just accumulating beyond our needs.
Author is an academic researcher, author, blogger, social entrepreneur, activist, mentor and tweets @javaidomar
But firms selling luxuries are much more sharply affected by changes in economic growth. Home furnishings, restaurants, holidays and cars are all types of product where economic growth is a critical factor when setting business plans.
ReplyDeleteyes because they are dependent more on defective financial system and the influence of ideological foundation of capitalism is more profound on them.
ReplyDelete